Negotiations for M-Pesa license fee underway
Safaricom Ethiopia Plc has on-boarded 933,000 customers as of October 11, 2022, after launching its first commercial service two and a half months ago. The operator is expected to surpass the one million milestone by this week.
The telecom provider has covered 17 cities and towns across the country since it launched its first commercial service in Dire Dawa on August 29, 2022. It plans to cover 25 cities and towns by April 2023.
“So far, 20,000 people are coming into our network every day, on average. People are excited,” Anwar Soussa, CEO of Safaricom Ethiopia, told The Reporter. “The network becomes more valuable the more it grows.”
Within five years, Safaricom expects to break even.
“For us, the first one or two years are about building the network and developing distribution. Once we see the network grow, then we will start seeing the true return of our investment in the country. For now, it is like a baby. But in two or three years, it will evolve as a grown business,” Soussa said.
Assessing the damages on the infrastructure in the conflict affected areas precedes commencing services in the area, according to the CEO.
“We need to know how much the infrastructure has been damaged there first. The damage to fiber optics and towers must be assessed and identified first. If ethio telecom’s infrastructure in the north is still intact, we will rely on theirs. But if it is damaged, we will see who builds it,” Soussa said.
However, if the fiber and towers are going to be rebuilt, according to him, it is going to take a long time. “We have to bring in the equipment and put employees in place. It is also risky to have too much staff on the ground. It depends on how much of the infrastructure is functional.”
For fiber optic infrastructure, Safaricom relies on ethio telecom, while building its own towers. The federal government and the TPLF reached a peace accord last week, including the resumption of basic services.
“The peace treaty signed recently is very crucial for us. But government guidance is required for both Safaricom and ethio telecom to commence services in the north,” said Tewedaj Eshetu, communications officer of Safaricom Ethiopia. “A ‘go-ahead’ is required from the government and other stakeholder institutions.”
Soussa expects stiff competition, especially in data and mobile money, while not opting for unlimited packages. “The problem with unlimited packages is that there are few users who use the network. So the network is congested and is not enjoyable for the rest of the users.”
“We are approaching the competition from where we are strong. We are focusing on data as our primary service. The second focus is M-Pesa, from our competitors’ perspective. Obviously the data network and M-Pesa are going to change everything on the ground,” added the CEO.
Safaricom is currently negotiating with the Ethiopian government regarding the requirements and terms expected from M-Pesa, which is expected to be the first foreign mobile money operator to secure a license in Ethiopia.
The central bank is amending the Payment Settlement Proclamation in a bid to enable the licensing of M-Pesa, Safaricom’s fintech arm. The draft proclamation approved by the Council of Ministers and submitted to the Parliament’s standing committee last week states that foreign mobile money operators should pay a fee for “investment protection.”
“We are negotiating the term of the license fee for M-Pesa. So we are waiting for a response from the central bank regarding the requirement expected from us. The negotiations are underway. Once the requirements and terms are disclosed, we will proceed,” Soussa said.
Once the amendment proclamation and its directives are approved, the company will be able to apply for the M-Pesa license from the NBE, according to Tewedaj.
Soussa, who says Safaricom will meet its coverage plan, fears power outages and the lack of transformers and equipment in the local market, which are becoming the biggest obstacles. Accessing hard currency to import equipment and acquiring land for infrastructure installations on time are also challenges.
A social media campaign on Safaricom’s recruitment process has also overshadowed the impact on the company at first, according to the CEO. “We have solved the social media complaints regarding our recruitment process. We assessed the issue of the complaint is valid.”
The CEO said that the company found gaps in the recruitment system. “We really took a close look at the process. Then we redesigned our processes. We have now completely changed the way we recruit. The company is becoming tighter regarding how we approach the market.”
